State Auditor Blaha releases annual tax increment financing legislative report

State Auditor Julie Blaha has released the annual Tax Increment Financing (TIF) Legislative Report for 2021 activity reported in 2022. “TIF districts are ending early more often – and that’s good news,” said Auditor Blaha. “The benefits of TIF for taxpayers are realized when a district ends and the new value becomes part of the tax base. Early decertifications show that once planned costs are paid, authorities are closing districts and reaping those benefits.”

Tax increment financing is a financing tool for redevelopment, housing, and economic development projects that allows authorities to use the incremental property taxes (i.e. “tax increments”), generated by the increased taxable value of a development to help finance the development activities.

“The OSA’s education and oversight activities help ensure good stewardship of tax increment financing, where authorities terminate TIF districts in a timely manner and return any excess tax increment revenues to counties, cities, and school districts,” added Blaha.

Highlights and Trends

In 2021, approximately $241 million of tax increment revenue was generated statewide, which is a decrease of seven percent from 2020 and slightly under the total from two years ago. The totals for each of these three most recent years exceeded those for each prior year over the past decade. In inflation-adjusted constant dollars, the past decade of revenues has been less than totals in the previous two decades and is more on par with totals from the mid-1980s. (Pages 19 – 22)

In 2021, 385 development authorities submitted reports to the OSA for 1,668 TIF districts. The number of districts since 2016 has largely remained constant at between 1,653 and 1,668 districts. (Pages 11 – 14)

In 2021, 99 new TIF districts were certified, 20 more than the 79 new districts certified in 2020. In 2021, 84 districts were decertified, a decrease of 15 percent from 2020. The number of new certifications each year has fluctuated less over the last ten years than the number of annual decertifications. (Pages 15 – 17)

In the latest five-year period, 78 percent of redevelopment and housing districts decertified early, compared to 38 percent of economic development districts decertifying early (a still-significant rate given their shorter statutory duration limits). While housing districts have more consistently decertified early, the early decertification rates for redevelopment and economic development districts have been increasing. (Page 18)

In 2021, development authorities returned $8,576,519 in tax increment revenue to county auditors for redistribution as property taxes to cities, counties, and school districts. (Page 22)

In 2021, there was $1.8 billion of outstanding debt associated with TIF districts, an increase of eight percent from 2020. Pay-As-You-Go (PAYG) obligations were the predominant type of debt, making up 68 percent of the debt reported. General Obligation (GO) bonds comprised about 16 percent of the total debt. Interfund loans (mostly from non-tax increment accounts) made up 11 percent of total debt.